Markes likely to get a flat-to-positive start

The Indian equity markets made a good recovery attempt in the final hours of last session to close in green, mainly supported by the defensive sectors. There was concern in early trades as Fitch Ratings reiterated its ‘negative’ outlook on India’s sovereign credit rating. Today the start is likely to remain flat and the third-quarter earnings will be a key focus in the near term. Traders will look for fresh impetus from the government to contain the ballooning fiscal deficit and meet its disinvestment target as the Finance Ministry has said that it is not worried about the threat of ratings downgrade by global agencies like Fitch as it is moving on the right track and will restrict fiscal deficit to 5.3 per cent of the GDP in 2012-13. The PSU oil marketing companies will keep buzzing as it has been reported that the government is planning to hike the price of subsidised LPG cylinders by Rs 130 during January-March 2013. It also plans to hike diesel prices by Rs 1.5 a litre every month. Some action will be seen in the telecom sector too, as the telecom department (DoT) has approached the Supreme Court seeking extension of its January 18 deadline for shutting down mobile networks till the next round of airwaves auctions.There will be some pressure on power stocks too as the Finance Ministry has raised concerns on the proposed discount on reserve price of coal mines to be offered to power companies.

The US markets extended their weak trend on Tuesday as uncertainty about the upcoming earnings season kept the investors cautious.Though economic news were good as US consumer credit rose by more than expected in November. The Asian markets have made a mixed start and some of the indices traded marginally in red in early trade led by Japanese market as yen edged higher.

Back home, key domestic benchmarks witnessed another day of consolidation though both the frontline indices managed to keep their head above water on Tuesday. Buying emerged in late trade, largely supported by Prime Minister Manmohan Singh’s comments that despite domestic constraints and challenges, India is confident that the strong economic fundamentals, backed by sound policies, will enable the country to return to a higher growth path. Sentiments also got some boost with the statement of Finance minister P Chidambaram that the difficult phase for the economy is over and that the focus would now shift to higher growth. Domestic bourses, traded choppy for most part of the session, re-conquered their crucial 6,000 (Nifty) and 19,700 (Sensex) bastions quite nicely in the late trade following recovery in banking counters. Shares like, SBI, HDFC Bank, Kotak Bank and Bank of Baroda edged higher after Reserve Bank of India (RBI) on January 7 hinted at allowing part of the statutory liquidity ratio (SLR) holdings of banks to be treated as liquid assets under the Basel-III guidelines, which will come into effect next fiscal. However, global cues remained sluggish as Asian market shut shop in the red on Tuesday as investors locked in profits after strong recent gains. Back home, the buying accelerated in last leg of trade was supported by rally in realty pack. Stocks like Unitech, HDIL and DLF surged after government planning to fast track approvals for real estate projects and put up all approval status online that will help house buyers to check on the status of the project approvals before booking a house and bring down home prices. Some support also came in from sugar stocks which edged higher on reports that government raising the levy price of sugar - the rate at which it buys the sweetener from mills to sell through ration shops - by over Rs 2 to about Rs 22 per kg for the current year. Moreover, shares of telecom services provider like Idea Cellular, Reliance Communication and Bharti Airtel edged higher during the trade after the Empowered Group of Ministers (EGoM) on telecom decided to slash the reserve price for CDMA spectrum by 30-50 percent. However, the gains remain capped as selling witnessed in metal counters as LMEX, a gauge of six metals traded on the London Metal Exchange, dropped 0.35% on January 7, 2013. Finally, the BSE Sensex gained 51.10 points or 0.26% to settle at 19,742.52, while the S&P CNX Nifty rose by 13.30 points or 0.22% to end at 6,001.70.